Will California Voters Support New Taxes to Avoid Painful Budget Cuts?

The Supreme Leader of California, Gavin Newsom, without a vote of the legislature changed the rules for receiving Workers Compensation—even though the law is clear, ONLY the legislature can do that.  The cost of this dictatorship rule?  $11.2 billion a year transferred from the private sector which creates jobs to the government sector which kills jobs.  The Split Roll will be on the November ballot—a $12 billion a year transfer of funds from the public to government—claiming government needs the money.  Obviously your business does not.

“”In a COVID-19 environment, raising money from as many sources as possible so we can make fewer cuts to this already devastated budget is so incredibly important,” said State Sen. Bill Dodd, D-Napa, the author of the sports gaming measure.

Sports gaming industry analysts estimate that taxes on sports wagering could bring in $500 to $700 million in new general fund revenues each year. The measure still faces an uncertain path to the ballot, as it will require a two-thirds vote in both houses of the Legislature.

Sacramento is using taxation to make government bigger and the private sector smaller—a loser—causing the productive families to leave the State.

Will California Voters Support New Taxes to Avoid Painful Budget Cuts?

Guy Marzorati, KQED,  6/9/20  

When supporters of increasing commercial property taxes, reshaping property tax transfer rules and legalizing sports gambling began formulating initiatives to put before voters in November, California’s economy was riding high — unemployment was at historic lows and state coffers were flush with fat surpluses.

With less than five months until Election Day, campaigns are now facing a different reality. California’s economy has cratered due to the pandemic, leaving lawmakers scrambling to fill tens of billions of dollars in lost revenues.

It also reshaped the political landscape.

“When you start an initiative campaign, you start so much ahead of when the actual ballot contest is that the entire world changes under your feet before you actually get to the ballot,” said Gale Kaufman, a political consultant with experience on dozens of high-profile ballot campaigns. “And certainly this go round, it’s moved several times and very dramatically.”

Now, ballot ideas promising to raise billions of dollars in new revenues are likely to be pitched as lifelines for the state budget and the services they fund. And supporters are betting that Californians will again be willing to support new taxes on the ballot if the alternative is painful cuts to schools and social services, as voters did during the last economic downturn.

‘In a COVID-19 environment, raising money from as many sources as possible so we can make fewer cuts to this already devastated budget is so incredibly important.’Napa Sen. Bill Dodd, author of a new sports gaming measure

The largest and most controversial new revenue measure would roll back part of Proposition 13, the landmark initiative passed by voters in 1978, to raise taxes on commercial properties worth over $3 million while leaving residential property taxes untouched.

The idea of so-called “split-roll” reform has been around for decades. Under this version, backed largely by unions representing teachers and others, the increased assessments of commercial properties could raise up to $12 billion a year for local governments and schools.

With local governments weighing deep cuts and schools facing increased costs to safely reopen in light of the coronavirus, “this measure is needed now more than ever,” said Alex Stack, a spokesman for the Schools and Communities First ballot campaign.

The budget crunch could also give a boost to initiative ideas that do more than just raise revenue.

A ballot measure sponsored by the California Association of Realtors would make it easier for homeowners to transfer their existing property tax rate to a new home, similar to Proposition 5, which California voters rejected in 2018.

But unlike that measure, the realtors’ new initiative would also require property tax reassessments for inherited properties, which could ultimately result in schools and local governments reaping hundreds of millions of dollars in new tax revenue every year.

“Right now local governments are facing severe budget deficits across the state,” said Becky Warren, a spokeswoman for the campaign. “This does not increase the tax rate while still providing some additional new revenues that could be used to fill some of those budget deficits.”

Legislators are getting into the game also. At the state Capitol, a proposal to legalize and tax sports wagering has been in the works for a year. Now, supporters of the idea hope the desperate state budget situation will entice support from voters who have no interest in ever placing a bet.

“In a COVID-19 environment, raising money from as many sources as possible so we can make fewer cuts to this already devastated budget is so incredibly important,” said State Sen. Bill Dodd, D-Napa, the author of the sports gaming measure.

Sports gaming industry analysts estimate that taxes on sports wagering could bring in $500 to $700 million in new general fund revenues each year. The measure still faces an uncertain path to the ballot, as it will require a two-thirds vote in both houses of the Legislature.

As state lawmakers have weighed billions in cuts to child care, senior services and health care, some have pointed to recent history for hopeful examples of voters rescuing the state budget at the ballot.

“$14 billion in trigger cuts would be a disaster,” said Assemblyman Kevin McCarty, D-Sacramento, referring to state spending reductions set to happen unless federal funding come through. “We need to look at other options, whether that’s internal borrowing or going to the voters like Governor [Jerry] Brown did in 2012 with Prop 30.”

Proposition 30 raised sales taxes as well as income taxes on the state’s highest earners to generate billions of dollars for the state’s general fund.

The measure followed years of budget cuts that slashed billions from schools, libraries and services for the disabled after the Great Recession ravaged the economy and government budgets. Brown warned that if Proposition 30 was rejected, further cuts would follow if voters didn’t come to the rescue.

By contrast, the state’s current fiscal situation has quickly spiraled downhill; just six months ago, state lawmakers were planning historic investments in schools and housing.

“With Prop 30, you had several years where [voters] saw teachers being laid off. They saw serious cuts taking effect in their classrooms,” said Kaufman, who worked to get Proposition 30 on the ballot. “This is not the same because it hasn’t happened yet.”

And opponents of the tax measures say it would be unfair to turn to voters, millions of whom out are of work or struggling to keep businesses afloat, to solve the state’s budget problem.

“To say that this is the time to raise taxes is utterly irrational and very dangerous,” said Susan Shelley of the Howard Jarvis Taxpayers Association, which opposes both the split roll and property tax transfer initiatives.

Shelley said that changing Proposition 13 to raise taxes on large commercial property owners could result in further layoffs, while the realtors’ property tax measure could saddle children with an enormous bill for any property they inherit.

The more applicable history lesson, Shelley said, is the result of California’s March primary, when voters rejected a statewide school bond and several local bond measures.

“Voters were already sending a message that they are taxed at the limit and they can’t pay anymore,” she said. “This is an indication that voters in California are squeezed and they can’t pay anymore.”

Given the uncertainty on what economic and public health realities voters will face in November, the ballot campaigns may have to shift their messages more than once in the next five months, said Kaufman.

“I think anyone running one of those campaigns can attempt to do it based on good, solid data, but to be honest, right now, the data has gotta be really about today. It’s really not a prospective look at how people are going to feel in two months or three months,” she said. “And that’s troubling.”

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.

Comments

  1. Really??? says

    So what is new? The Radical Democrats (that included 80% of the party) have been using this for years.

    The death of a thousand cuts. 1/2% here 1% there, a gasoline tax of 6%, It all adds up,

    At each venture into the private sector pocket book, the excuse is it us just a small amount. How can you object.

    Well guess what, you include Federal, State and local taxes you pay more then 50% of your income in taxes.

    Does that make you feel warm and fuzzy? Does that allow you to provide your own retirement?

    Get it. The death of a thousand cuts, and when you finally figure it out you are taxed to death for a Democrat Dictatorship.

  2. John Steele says

    YOU CAN COUNT ON IT..

  3. Otis Needleman says

    The fools will vote for new taxes. I won’t and never will.

    Gavin’s Gotta Go! Recall Newsom!

  4. Enough households and businesses are ailing that even far-left California voters may deliver their overseers a rude awakening come November. The money simply isn’t there when a large number of people can’t make their car payments, credit card payments and mortgage payments, especially when unemployment has been so slow to kick in. What will happen to those who have permanently lost their jobs or businesses? There may be few jobs as alternatives, and likely at lower wages. Are those affected going to willingly add to their economic woes by jacking up taxes? Let’s see if a majority of California voters still have the sense given to them by the Creator to “just say no.”

  5. Marcy Berry says

    Again, government creates a problem, and then taxes us to “solve” that same problem. Vote NO on everything. Covid is real (people have died) but government’s response to this pandemic borders on the lunatic. Maybe voting No on their “solution” will send a message that we are not accepting this game.

  6. The majority of people that do not, have not or never will own a business that requires commercial property will probably vote for the split roll taxes. Because its just those “rich” business owners that will pay. What they do not understand is the double edged sword, or dagger in their back. one side is the cost of doing business will always be passed on to the very same people that vote yes, that is only if the said business can survive by charging higher prices. then if they cannot afford to raise prices to cover cost of new property taxes they close and stop paying rent and or mortgages. The value of that commercial property goes down and if taxes still cannot be paid the state takes property to sell for the back taxes owed. this in turn lowers the value of property even more. Then the local neighborhoods do not have businesses to make life convenient or go to work at. Next is the residential properties in surrounding areas start to drop in value. Now those same people that voted for tax increases on commercial property want to cash out and take equity into retirement. But, alas, they have no equity to retire with or downsize even if they are smart enough to get out of the state. For the state, they create budgets based on current market values and spend based on forecast tax revenue. Tax revenue actually starts to decline on both commercial property and residential. The state still needs to cover the utopian programs, and so the circle of taxes begin all over with threats of school and safety cuts. Good Luck to you all.

  7. Dntgiveup says

    That would be another brilliant move by these liberal lunatics, people are struggling to live in this dictator state so throw another tax on them because the politicians have squandered the money on their pet projects. F Newsom and his liberal regime I won’t and never have voted for tax increases and they still stick them to us. When will this state open its eyes and realize this is one political disaster.

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